Table 3
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Bank regulatory capital and syndicated loan sales

Dependent variable: |$Loan Sale_{ijt}$|Regulatory rating
BaselineDynamicPassFail
 [1][2][3][4]
Tier 1 Capital/RWA|$_{t-1}$|-0.158***-0.189***-0.108*-0.499**
 (0.057)(0.050)(0.060)(0.196)
Tier 1 Capital/RWA|$_{t-1} \ \times$|TED|$_t$| -0.292***
  (0.070)
Size|$_{t-1}$|-0.0040.005-0.002-0.012
 (0.004)(0.003)(0.004)(0.012)
Wholesale Funding|$_{t-1}$|0.110***0.100***0.111***0.121**
 (0.017)(0.014)(0.018)(0.057)
Real Estate Loan Share|$_{t-1}$|0.0200.043***0.027-0.036
 (0.019)(0.017)(0.020)(0.062)
C&I Loan Share|$_{t-1}$|-0.119***-0.052**-0.076**-0.303***
 (0.030)(0.026)(0.031)(0.004)
Non-Interest Income|$_{t-1}$|0.009-0.003***-0.001***-0.003***
 (0.018)(0.000)(0.000)(0.001)
Loan Share/Assets|$_{t-1}$|0.006***0.005***0.006***0.008
 (0.001)(0.001)(0.002)(0.005)
Lead Arranger|$_{t-1}$|-0.028***-0.027***-0.026***-0.033***
 (0.003)(0.003)(0.003)(0.009)
Bank controls |$\times$|TED|$_t$|NYNN
Bank fixed effectsYYYY
Loan-year fixed effectsYYYY
Observations97,23897,23883,75913,479
(R2)0.8780.8730.8810.870
Dependent variable: |$Loan Sale_{ijt}$|Regulatory rating
BaselineDynamicPassFail
 [1][2][3][4]
Tier 1 Capital/RWA|$_{t-1}$|-0.158***-0.189***-0.108*-0.499**
 (0.057)(0.050)(0.060)(0.196)
Tier 1 Capital/RWA|$_{t-1} \ \times$|TED|$_t$| -0.292***
  (0.070)
Size|$_{t-1}$|-0.0040.005-0.002-0.012
 (0.004)(0.003)(0.004)(0.012)
Wholesale Funding|$_{t-1}$|0.110***0.100***0.111***0.121**
 (0.017)(0.014)(0.018)(0.057)
Real Estate Loan Share|$_{t-1}$|0.0200.043***0.027-0.036
 (0.019)(0.017)(0.020)(0.062)
C&I Loan Share|$_{t-1}$|-0.119***-0.052**-0.076**-0.303***
 (0.030)(0.026)(0.031)(0.004)
Non-Interest Income|$_{t-1}$|0.009-0.003***-0.001***-0.003***
 (0.018)(0.000)(0.000)(0.001)
Loan Share/Assets|$_{t-1}$|0.006***0.005***0.006***0.008
 (0.001)(0.001)(0.002)(0.005)
Lead Arranger|$_{t-1}$|-0.028***-0.027***-0.026***-0.033***
 (0.003)(0.003)(0.003)(0.009)
Bank controls |$\times$|TED|$_t$|NYNN
Bank fixed effectsYYYY
Loan-year fixed effectsYYYY
Observations97,23897,23883,75913,479
(R2)0.8780.8730.8810.870

This table shows the effects of bank regulatory capital for loan sales. The unit of observation in each regression is a loan share-bank-year triple. The dependent variable is an indicator variable equal to one if a lender reduces its ownership stake in a loan that it funded in the previous year. Column [1] includes the sample of loan sales from 2002 to 2014. Column [2] interacts capital with the TED spread (⁠|$TED_t$|⁠), defined as the yearly average of the daily difference between the three-month London Interbank Offered Rate (LIBOR) and the three-month U.S. Treasury rate. Note that |$TED_t$| is demeaned. Columns [3] and [4] classify a loan as “Pass” by the examining agency if it has not been criticized in any way and “Fail” otherwise (i.e., the loan is rated special mention, substandard, doubtful, or loss). All columns include controls for bank and loan-year fixed effects, and an indicator variable for whether the bank has undergone a merger in the past year. All variables are defined in Table A1. Standard errors (in parentheses) are clustered at the loan level. ***, **, and * denote 1%, 5%, and 10% statistical significance, respectively.

Table 3
Open in new tab

Bank regulatory capital and syndicated loan sales

Dependent variable: |$Loan Sale_{ijt}$|Regulatory rating
BaselineDynamicPassFail
 [1][2][3][4]
Tier 1 Capital/RWA|$_{t-1}$|-0.158***-0.189***-0.108*-0.499**
 (0.057)(0.050)(0.060)(0.196)
Tier 1 Capital/RWA|$_{t-1} \ \times$|TED|$_t$| -0.292***
  (0.070)
Size|$_{t-1}$|-0.0040.005-0.002-0.012
 (0.004)(0.003)(0.004)(0.012)
Wholesale Funding|$_{t-1}$|0.110***0.100***0.111***0.121**
 (0.017)(0.014)(0.018)(0.057)
Real Estate Loan Share|$_{t-1}$|0.0200.043***0.027-0.036
 (0.019)(0.017)(0.020)(0.062)
C&I Loan Share|$_{t-1}$|-0.119***-0.052**-0.076**-0.303***
 (0.030)(0.026)(0.031)(0.004)
Non-Interest Income|$_{t-1}$|0.009-0.003***-0.001***-0.003***
 (0.018)(0.000)(0.000)(0.001)
Loan Share/Assets|$_{t-1}$|0.006***0.005***0.006***0.008
 (0.001)(0.001)(0.002)(0.005)
Lead Arranger|$_{t-1}$|-0.028***-0.027***-0.026***-0.033***
 (0.003)(0.003)(0.003)(0.009)
Bank controls |$\times$|TED|$_t$|NYNN
Bank fixed effectsYYYY
Loan-year fixed effectsYYYY
Observations97,23897,23883,75913,479
(R2)0.8780.8730.8810.870
Dependent variable: |$Loan Sale_{ijt}$|Regulatory rating
BaselineDynamicPassFail
 [1][2][3][4]
Tier 1 Capital/RWA|$_{t-1}$|-0.158***-0.189***-0.108*-0.499**
 (0.057)(0.050)(0.060)(0.196)
Tier 1 Capital/RWA|$_{t-1} \ \times$|TED|$_t$| -0.292***
  (0.070)
Size|$_{t-1}$|-0.0040.005-0.002-0.012
 (0.004)(0.003)(0.004)(0.012)
Wholesale Funding|$_{t-1}$|0.110***0.100***0.111***0.121**
 (0.017)(0.014)(0.018)(0.057)
Real Estate Loan Share|$_{t-1}$|0.0200.043***0.027-0.036
 (0.019)(0.017)(0.020)(0.062)
C&I Loan Share|$_{t-1}$|-0.119***-0.052**-0.076**-0.303***
 (0.030)(0.026)(0.031)(0.004)
Non-Interest Income|$_{t-1}$|0.009-0.003***-0.001***-0.003***
 (0.018)(0.000)(0.000)(0.001)
Loan Share/Assets|$_{t-1}$|0.006***0.005***0.006***0.008
 (0.001)(0.001)(0.002)(0.005)
Lead Arranger|$_{t-1}$|-0.028***-0.027***-0.026***-0.033***
 (0.003)(0.003)(0.003)(0.009)
Bank controls |$\times$|TED|$_t$|NYNN
Bank fixed effectsYYYY
Loan-year fixed effectsYYYY
Observations97,23897,23883,75913,479
(R2)0.8780.8730.8810.870

This table shows the effects of bank regulatory capital for loan sales. The unit of observation in each regression is a loan share-bank-year triple. The dependent variable is an indicator variable equal to one if a lender reduces its ownership stake in a loan that it funded in the previous year. Column [1] includes the sample of loan sales from 2002 to 2014. Column [2] interacts capital with the TED spread (⁠|$TED_t$|⁠), defined as the yearly average of the daily difference between the three-month London Interbank Offered Rate (LIBOR) and the three-month U.S. Treasury rate. Note that |$TED_t$| is demeaned. Columns [3] and [4] classify a loan as “Pass” by the examining agency if it has not been criticized in any way and “Fail” otherwise (i.e., the loan is rated special mention, substandard, doubtful, or loss). All columns include controls for bank and loan-year fixed effects, and an indicator variable for whether the bank has undergone a merger in the past year. All variables are defined in Table A1. Standard errors (in parentheses) are clustered at the loan level. ***, **, and * denote 1%, 5%, and 10% statistical significance, respectively.

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